To begin, the oil stays above the water because the oil is lighter than the water or less dense than the water. The oil and the water do not mix because of something called intermolecular polarity. Molecular polarity basically means that water molecules are attracted to other water molecules. They get along fine, and can loosely bond together. This is similar to magnets that are attracted to each other. When you add the tablet piece, it sinks to the bottom and dissolves while creating a gas. As the gas bubbles rise, they take some of the coloured water with them. When the blob of water reaches the top, the gas escapes and down goes the water.